Hewlett Packard Enterprise: Q3 2023 Earnings Preview

Written by Larince Zhang

Hewlett Packard Enterprise Co. is a global edge-to-cloud company, actively engaging in the provision of information technology, technology and enterprise products, solutions and services. It operates through various segments namely Compute (general purpose servers for multi-workload computing, workload optimized servers for demanding applications), High Performance Computing & Artificial Intelligence (offers hardware and software solutions to support specific use cases), Storage (provides workload optimized storage product and service offerings), Intelligent Edge (offers wired and wireless local area network, campus and data center switching, software-defined wide-area-network, network security and associated services to enable secure connectivity) and the Financial segment (which provides flexible investment solution and consumption models that support business transformation).

Last week, HPE’s partner Nvidia smashed consensus estimates, with revenue and EPS up 101% and 854% from the prior year period, mainly contributed by its outstanding performance in the data center segment. The company’s share price soared to a record high $496.20 following the announcement (now back to $459.80). Could HPE deliver the same good news for investors just like Nvidia? We shall have to wait and see in its Q3 2023 earnings result, scheduled to be released on 29th August (Tuesday), after market close.

HPE: Revenues & Earnings (After Deduction of Tax and Expenses). Source: Tipranks

In the previous quarter, HPE reported $7.0B in sales revenue, which missed analysts’ forecast and its own estimate ($7.1B to $7.5B). By segment, Intelligent Edge generated the most revenue at $1.3B, up 50% (y/y); High Performance Computing & AI and Financial services were up 18% (y/y) and 4% (y/y) respectively, to $840 million and $858 million. These gains were partially offset by the Compute and Storage segments that underperformed, down -8% (y/y) and -3% (y/y) respectively to $2.8B and $1.0B. Gross profit margin hit 36.2%, up 2% from prior year period; after taking out operating expenses and overhead, the company earned 11.5% in operating profit margin, up 2.2% from the prior year period.

HPE: Reported Sales versus Analyst Forecast. Source: CNN Business

In the coming announcement, consensus estimates for sales revenue of HPE remain flat at $7.0B, within the range of the company’s outlook ($6.7B to $7.2B).

HPE: Reported EPS versus Analyst Forecast. Source: CNN Business

EPS is expected to hit $0.47, down -9.6% from the previous quarter. In the same period last year, the company’s EPS was $0.48.

Last Friday, Fed Chair Jerome Powell reiterated his hawkish stance whereby higher rates may be required to ease the still-high price pressure. There is still some work to be done, and the market has now priced in the terminal rate at a 5.5%-5.75% range, a quarter-point higher than the current range – more pressure for the stock market in the near term?

Technical Analysis:

The #HewlettPackard share price has experienced a technical correction since its failure to break resistance at $17.70, shortly after leaving a new high since March 2018, at $18.12. The asset is currently testing support zone $16.45-$16.95. A break below the zone may further support the correction move towards the next support at $15.50, and the dynamic support 100-week SMA. Otherwise, if the bulls gain control and break above $17.70 and $18.12, the next resistance that is projected by Fibonacci Expansion lies at $19.00, followed by $20.45.

About the author

Larince Zhang

Larince entered the world of live market analysis and trading in 2013. Her passion ranges from foreign exchange to commodities, indices and futures as well as stocks. Having a Bachelor Degree majoring in Banking and Finance, she strives to make full use of her learned knowledge together with practical trading to achieve a more comprehensive market analysis.

Through years of trading experience, she believes “Simple is Best”, as the market is driven by human activity. It is human psychology that one should opt to improve on instead of mere technical or fundamental analysis. She believes in three core elements to a mature trading approach – scrupulous trading mindset, well-planned strategies and strict money management.